vendor passed away before settlement!

[TMNT]

I don't understand the question.

If you die there is a final tax return done in the year of death and then the estate does the tax return for itself until the assets are passed.

If you die with a large portfolio and pass these on then the beneficiary won't pay CGT until those properties are sold. However you cannot pass on loans. So a beneficiary would have to apply to a bank to keep the loans at the same amount or the loans will need to be paid out by the estate or by the beneficiary. Depends on the terms of the will. Loans have no effect on CGT generally.

If your mum owned property and passed them onto you the tax would only be payable when they are sold. You will generally inherit her cost base, unless it was the main residence in which you will inherit the cost base at the time of death.

If the estate sold them then the estate would pay the CGT. If the debt is more than the assets of the estate then it will be insolvent. This doesn't fall into the hands of beneficiaries but stops there.

Ok sorry, I was confusing

I'll put it bluntly

Im looking at two strategies with the least possible tax

1. Spend all my equity away while I'm alive ie refinance just before I die, spend it all, give it to kids, buy property in their name, when I die, everything gets sold off, and I'll have pretty much zero left, but then I'll get a huge cgt bill but the debt will die with me

2. Spend little, gets passed onto my kids with zero tax upon transfer upon my death, is this possible, so kids inherit portfolio with low lvr, and can rely on future cg

 

[antistar]

Yup they get a bit agressive! Luckily it wasn't me

 

[Terry_w]

Ok sorry, I was confusing

I'll put it bluntly

Im looking at two strategies with the least possible tax

1. Spend all my equity away while I'm alive ie refinance just before I die, spend it all, give it to kids, buy property in their name, when I die, everything gets sold off, and I'll have pretty much zero left, but then I'll get a huge cgt bill but the debt will die with me

2. Spend little, gets passed onto my kids with zero tax upon transfer upon my death, is this possible, so kids inherit portfolio with low lvr, and can rely on future cg

1. Is possible but the normal rules of bankruptcy apply so transactions to defeat creditors can be clawed back and undermarket value transfers too - includes gifts to children.

2. Kids would inherit CGT pregnant assets with the CGT coming in when they eventually sell.

 

[allegria]

See the ops options 1 and 2.

Transfer cannot be completed until probate is granted.

Could settlement take place if the deceased vendor had already signed the Transfer?

Titles wouldn't know about it but whether down the track various agencies (e.g. state revenue) link up dates with ATO and realise the vendor was deceased at settlement and cause a problem?

 

[Terry_w]

Could settlement take place if the deceased vendor had already signed the Transfer?

Titles wouldn't know about it but whether down the track various agencies (e.g. state revenue) link up dates with ATO and realise the vendor was deceased at settlement and cause a problem?

Not sure off the top of my head, but think that it would be possible.

 

[jrc]

Could settlement take place if the deceased vendor had already signed the Transfer?

Titles wouldn't know about it but whether down the track various agencies (e.g. state revenue) link up dates with ATO and realise the vendor was deceased at settlement and cause a problem?

If settlement had not taken place prior to the death, then even if there was a signed transfer, settlement should not occur. From memory, immediately upon death Section 45 Probate & Administration Act says upon death the property vests in the deceased's executor or administrator. The executor/ administrator can only deal with the property to transfer title after probate or letters of administration are granted. I would suspect that a solicitor or conveyancer who settled after they knew the vendor was deceased would have a lot of explaining to do.

 

[Paul@PFI]

I prefer executed solicitors

 

[Terry_w]

If settlement had not taken place prior to the death, then even if there was a signed transfer, settlement should not occur. From memory, immediately upon death Section 45 Probate & Administration Act says upon death the property vests in the deceased's executor or administrator. The executor/ administrator can only deal with the property to transfer title after probate or letters of administration are granted. I would suspect that a solicitor or conveyancer who settled after they knew the vendor was deceased would have a lot of explaining to do.

But if there is a signed transfer the transferor has done everything needed for completion to occur, except for registration. I am not sure your answer is correct.